August, 1, 2022
Time to dig deep for that island sense of joie de vivre and look for those silver linings… And despite the pessimistic economic forecast for the next 12 months, and the less than delightful long and short-term business outlook, a belief that change for the better is coming is our only hope.
As the energy and drive of the push on 9 July dissipated into confusion, sporadic violence and a surreal sense of déjà vu, few would argue that political stability and economic recovery are the direst of needs at this time – and that the recuperation of business confidence is dependent on these.
THE INDEX The LMD-NielsenIQ Business Confidence Index (BCI) reflects traction as there has been no further slippage from last month’s dismal 49 basis points. Still a far cry from what it was just two – but seemingly eons – months ago, of what now appears as a desirable 99 in May.
The question still remains as to whether the barometer will descend to (or below) the all-time low of 31 (September 2001) when parliament was prorogued, and the country rocked by civil war and bomb blasts.
It’s almost impossible to believe that it was but a year ago that there was optimism in the air as the full force of the pandemic ebbed, and the BCI mimicked what we see today – traction. The index in both June and July 2021 registered 87, from whence it made a steady ascent until as recently as March this year, before it began its descent.
While we can cite the economic and forex crises, and unprecedented political upheaval, for the lowly score of the barometer of biz confidence, the index is still very uncomfortably below its all-time average of 125 and too many points adrift of the 12 month average of 100.
“A shroud of darkness has come over Sri Lanka and people are at their wits end on how to survive… How long will it take for our economy to turn around is the question of the day,” remarks NielsenIQ’s Director – Consumer Insights Therica Miyanadeniya.
SENSITIVITIES The nation has been on the cusp of change – but few can iterate the shape and form it will take. On the contrary, everyone is well aware that the immediate future is bleak.
As we continue to be mired in political uncertainty, and political leaders in other more affluent and astute countries also totter and fall, the hope is that the strife of these past months will yield some respite for the people.
Moreover, Sri Lanka needs to mitigate the shortage of fuel and gas, reverse the inflation spiral, restore 24/7 power and source the bridging finance it requires until an agreement is reached with the IMF for a bailout package.
PROJECTIONS There is no denying that more than 80 percent of leaders are pessimistic about the ability of the economy to recover in the next 12 months. Neither do they envision better prospects in the year to come.
In last month’s edition, we said that “its lose-lose time – and even at this eleventh hour, the only way forward is surely up.” As it turns out, the month on month BCI has been win nor lose.
As for the future vis-à-vis the index, your guess is as good as ours!